Electronic Data Interchange (EDI) is a technology that allows businesses to exchange documents and data electronically, rather than using paper. This process streamlines communication by enabling companies to send purchase orders, invoices, and shipping notices directly between their computer systems. EDI reduces errors and speeds up transactions, making it easier for businesses to operate efficiently. By using standardized formats, EDI ensures that the information is easily understood by different systems, regardless of the software used. This interoperability is crucial for industries like retail, manufacturing, and logistics, where timely and accurate data exchange is essential for smooth operations.